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Canadian National posts stronger Q4 profit, ups dividend 25%, provides rosy outlook

Last updated: 01:07 29 Jan 2015 AEDT, First published: 02:07 29 Jan 2015 AEDT

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Canadian National Railway (TSE:CNR) hit a new 52-week high after the country's largest railroad reported stronger fourth-quarter earnings and raised dividend while providing a robust outlook in 2015.  

Shares rose to C$86.73, the highest in more than a year, and were trading at C$85.90, up 0.9%, at 9:48 a.m. in New York.

Net income rose to C$844 million, or C$1.03 per share, in the October-to-December quarter, from C$635 million, or C$0.76 per share, a year earlier, the Montreal, Quebec-based company said in a statement late yesterday. Excluding items, adjusted net income for the quarter was C$1.03 per share, compared to C$0.75 per share in the year-earlier quarter.

The weaker Canadian dollar boosted earnings by about C$0.06 per share in the quarter, it said.

Revenue rose to C$3.21 billion from C$2.75 billion.

Analysts, on average, had expected earnings of C$0.97 per share on revenue of C$3.12 billion, according to Capital IQ data.

Operating ratio, a key efficiency measure, improved 4.1 points to 60.7 percent for the fourth quarter, but lagged rival CP Rail's (TSE:CP) 59.8 percent operating ratio.The ratio expresses operating costs as a percentage of revenue, so lower values are better.

Rail freight revenue grew 17 percent to C$3.02 billion from C$2.58 billion in the year-earlier quarter.

Rail freight revenue per revenue ton-mile, a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile, grew 7 percent to 5.04 cents from last year. Total rail freight revenue per carload also increased 5 percent to C$2,082 from last year.

“CN delivered a strong fourth-quarter 2014 performance,” chief executive officer Claude Mongeau said in the statement. “We're particularly proud of our solid operating performance that allowed us to move record volumes of Western Canadian grain and equally strong U.S. grain shipments.”

CN Rail increased its quarterly dividend 25 percent to C$0.3125 per common share. A quarterly dividend will be paid on March 31 to shareholders of record at the close of business on March 10.

Including yesterday's announcement, CN has declared annual increases to its dividend 19 consecutive times, averaging 17 percent per year, since its initial public offering of shares in 1995.

CN said the latest results capped off a year that started with a brutal winter that hampered operations, but began to rebound in March. It said it moved 1.4 million carloads in the quarter

Looking ahead, CN is guiding for double-digit earnings growth in 2015 over adjusted 2014 earnings of C$3.76 a share. It also said it would boost capital spending by roughly C$300 million this year for a total investment of about C$2.6 billion.

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